Lenovo’s earnings report is in and the results highlight the challenges that lie ahead. In its first full quarter since acquiring Motorola Mobility from Google for $2.9 billion and IBM’s x86 server business for $2.3 billion, the Chinese company’s net profit dropped 37 percent despite solid PC sales.
Given the financial scope of the two acquisitions, such an impact was to be expected.
For the quarter, the world’s largest PC vendor posted a net profit of $100 million, down from the $158 million it earned in the year ago quarter. Revenue shot up 21 percent, however, to $11.3 billion. On the year, Lenovo posted revenue of $46.3 billion with an annual profit of $829 million.
Lenovo said it shipped 18.7 million smartphones during the three-month period, 7.8 million of which were Motorola devices. That’s up from 16 million units moved in the previous quarter. For the full year, the company shipped 76 million handsets – its best showing to date.
Despite the fact that Lenovo moved more mobile devices, its PC business remains its bread and butter. The company shipped 60 million computers during the 2014 financial year.
In February, it came to light that Lenovo had been injecting adware in PC shipped to customers and earlier this month, researchers discovered a trio of serious security flaws related to Lenovo’s system update feature. It'll be curious to see how these two negative marks will affect sales moving forward.